Since 1982, Mr. Harris has been trying to recoup a $110,000 loan made to the director of a Spanish language school in Michoacan. Although the loan was made here in front of Mexican witnesses, Mexican courts have ruled they have no jurisdiction because Harris and the school director are United States citizens. The US courts say they have no jurisdiction over a Mexican business contract.

Now on his fourth lawyer, Harris says: "All my lawyers tell me that I'm not winning because I'm not paying the judge."

The Harris challenge - and other recent cases of alleged corruption - touch on a familiar complaint by foreigners doing business in Mexico: Even under reform-minded President Carlos Salinas de Gortari, bribes are a standard operating procedure and there is no legal recourse for those who buck the system.

Many acknowledge that President Salinas has reduced red tape and made it easier for foreign businesses to operate without resorting to illegal payoffs. But the problem remains well-entrenched, they say. And the issue of corruption is now starting to catch the attention of those opposing the North American Free Trade Agreement (NAFTA).

"High-level government complicity in corruption is a powerful argument against free trade. It will be one of the most important issues in next year's elections and it would be extremely naive not to be concerned about it," says Ricardo Pascoe, a close adviser to Cuauhtemoc Cardenas, presidential candidate for the left-leaning Party of the Democratic Revolution. NAFTA considerations

In the US, Sen. Ernest Fritz Hollings (D) of South Carolina has questioned whether NAFTA would open the door to more "free trade or fee trade."

Politicians and organizations questioning the wisdom of uniting widely disparate business cultures and legal systems under NAFTA are likely to focus not just on the Harris case but also on the potentially more explosive International Business Machines Corporation (IBM) scandal.

The story broke Feb. 3 in The Financial Times, where British businessman Kaveh Moussavi alleged that IBM's division in Bethesda, Md., lost a $21 million bid to update Mexico's air traffic control system because it failed to pay a $1 million bribe.

Mr. Moussavi was approached on Nov. 9, he says, by three men in the lobby of the Hotel Nikko in Mexico City. They refused to give their names, but as "credentials" they showed Moussavi government confidential documents and discussed how IBM could "win" the bid.

"I was IBM's agent. I was eating, sleeping, and dreaming this tender. But these guys knew it better than I did," says Moussavi in a telephone interview.

Moussavi returned to his room and called his boss in the US. They agreed US law forbids such payments. But the payment could be legal if the three men could prove they weren't Mexican officials or the money wouldn't go to government officials, he recounts in a detailed account published in Proceso, a Mexican news magazine.

Moussavi went back to the lobby, but the men refused to reveal their identities. Ten days later, the bidding was canceled. In December, a new round of bidding was held under new specifications and French and Italian firms won the contract. IBM officials back article

IBM officials in the US backed the idea to go to The Financial Times, Moussavi says. "IBM was outraged when they lost. They were outraged not only because they lost, but they lost for the wrong reasons. They were absolutely determined to expose the corruption," he says.

Moussavi cites a Dec. 16 letter from Roger Boyd of IBM which states: "I am now relatively certain that the cancelation of the previous bid was engineered by someone with influence who needed some way to lower their price."

But when the story broke on Feb. 3, IBM and its Mexican subsidiary, which was not involved in the bidding, both scrambled to distance themselves from Moussavi's claims. IBM denied a bribe had occurred. A brief investigation ensued. On Feb. 19, the Mexican government ended the investigation, saying neither Moussavi nor IBM had been able to provide any evidence of a bribe.

Moussavi is furious. He calls it a "complete and cowardly" coverup to protect corrupt Mexican officials and IBM de Mexico's interests. In the coming weeks, Moussavi will file a defamation and breach of contract suit against IBM in the US and will seek punative damages amounting to "millions," according to his attorney Robert Perry, a partner at Wilkes, Artis, Hedrick, &amp; Lane, a Washington law firm.

Moussavi says IBM abandoned him and taped conversations will prove his story. He also scorns the Mexican government's investigation.

"The sum total of the investigation is a half-page fax to my lawyer with two questions. They never asked if I could describe the men, what they were wearing, did they speak English, any distinctive features, or the circumstances which led to our meeting," he relates.

"Imagine you're walking down the street and witness a bank robbery and report it. The police then ask only two names and did they work at the bank? If you answer no, would it be fair to end the investigation and conclude the bank was never robbed?"

Moussavi says he also intends a defamation suit against IBM of Mexico and Andres Caso Lombardo, who was, until last week, the secretary of communication and transportation.

How far is such legal action in Mexico likely to get? Moussavi asked a well-known Mexican lawyer to take his case. The lawyer wrote back on March 24, before Mr. Caso stepped down, stating: "A penal accusation against a current minister hasn't a chance to prosper, and I don't advise you bring it if in your perspectives are business in Mexico."

Moussavi says he's done business in Mexico for years. "This wasn't the first time I'd been approached for a bribe. But I saluted Salinas for trying to clean up Mexico. I thought the atmosphere had changed.... I was naive."

A Mexican government spokesman rebuts Moussavi's sweeping conclusions. "There are many foreign companies in Mexico who have been here for years without any trouble or complications. Look at the figures for foriegn investment: in excess of $25 billion over the last four years. That's a very good sign of how investors feel about coming to Mexico."

Nonetheless, US congressional sources say they will dig into the issue. On April 29, the Senate Commerce Committee will be holding hearings on NAFTA. Moussavi hasn't yet been invited to testify. But a senior congressional staffer says, "The Moussavi case will be making the rounds on Capitol Hill as a prime example of the risks you take when doing business in Mexico."